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The city’s public safety unions will no longer be able to use binding arbitration — a means of triggering a third-party arbiter to make the final decision in contract disputes. The City Council can now negotiate reduced employee retirement benefits without seeking voter approval.

As of the clerk’s last count Tuesday night, 42 percent of registered voters in San Luis Obispo cast their ballots in the election with 10,256 of the 24,323 ballots mailed out at the beginning of the month returning by 8 p.m. Tuesday.

Only 507 ballots remain to be counted.

Supporters of Measures A and B gathered at the county Clerk-Recorder’s Office jubilantly rejoicing as the first results were released just after 8 p.m.

City Councilman Andrew Carter — one of the most vocal council members in support of the measures, and who often came under fire from the unions during the election — said the results are a clear indication that citizens want the council to get the city’s budget in order.

“They may have won the battle then,” said Carter, referring to the passage of binding arbitration by voters in 2000, which has been used once by the police union. “But they lost the war.”

Carter said the election gives the City Council a “strong negotiation position” with its employee groups.

The protracted clash between the city’s public safety unions and the majority of the City Council leading up to the election has been one of the most heated debates in the city’s recent past.

Erik Baskin, president of the fire union, said in a news release, “While we are disappointed with the results of the election, we are grateful that this divisive campaign is now behind us and that we can return all of our focus to providing the best public safety possible to the citizens of San Luis Obispo.”

This was the city’s first mail-only special election and the largest such election handled by the county clerk recorder.

The outcome of the election is expected to set the tone for the ongoing salary and benefit negotiations with nearly all the city’s employee groups. Those contracts expire in December, and the City Council has vowed to save more than $4 million in employee compensation cuts to keep the city’s budget balanced.

During negotiations, city employees will be asked to accept a total of $4.5 million in pay and benefit cuts over the next two fiscal years. Those cuts are expected to save $1.5 million this fiscal year and $3.1 million in fiscal year 2012-13.

“This tells me that voters really understood the basic issues and that given the economic times facing us, the City Council needs the tools necessary to craft a financially sustainable future,” Mayor Jan Marx said.

Marx said she would reach out to the union leaders to help ease the tension that has mounted during the campaign.

“We don’t want this to be construed as any disrespect for our police and fire employees,” Marx said.

In May, San Luis Obispo Superior Court Judge Charles Crandall denied a court order sought by the San Luis Obispo Police Officers Association to stop the election with a temporary restraining order on the grounds that the city is ignoring its obligations to the union by violating “meet-and-confer” rules that the city must adhere to.

The union vowed to continue its legal efforts to postpone the election but a hearing scheduled for Aug. 18 was postponed until Sept. 29.

City Attorney Christine Dietrick said she was “not clear if the lawsuit has continuing validity post election.”

Alison Berry Wilkinson, representing the police union, said Tuesday that the union would reevaluate its stance after the election results and decide how to proceed with the lawsuit.

The City Council is expected to certify the election results Sept. 20. City Clerk Elaina Cano said that any changes to the city’s charter must also be approved by the secretary of state before it can be finalized.